The Frenchman, 45, is walking away just days after guiding the Spanish giants to an unprecedented third Champions League victory in a row.

Los Blancos defeated Atletico Madrid on penalties to win the Champions League in his first season in charge before beating Juventus last year and Liverpool on Saturday.

Zidane, who was under contract until 2020 in Madrid, offered little suggestion he would quit after the 3-1 victory in Kiev but he has decided the time is right to leave the Bernabeu, and does so on a high.

Zinedine Zidane called a press conference on Thursday to announced the news (Image: REUTERS)

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Appearing at a press conference alongside Real president Florentino Perez, World Cup winner Zidane said: "I have taken the decision to not continue going into the next season.

"For me and for everybody, I think the moment to change has arrived. It was not an easy decision.

"The squad already knows," he continued. "I've not talked to them all individually but they all know.

"I've sent a message to all the squad and I've spoken to Sergio Ramos.

"As always as a person and captain, we have lived a lot together, he respects my decision. He wished me luck.

"He is a leader, a captain and it has been a pleasure to share three more years with him."

Real president Perez, who also addressed the world's media in the press conference, said: "This was a totally unexpected decision, Zidane informed me of his choice yesterday. I thank him for the work he has done."

Perez claimed Zidane's decision to stand down as boss was a "surprise" (Image: AFP)

Real Madrid struggled in La Liga this season, compared to their usual high standards, as Barcelona ran away with the title.

Ernesto Valverde's Catalan giants tied up the league in a 3-0 El Clasico win at the Bernabeu in December, heaping pressure on Zidane.

But the Los Blancos boss bounced back in typical fashion in the Champions League, guiding his side past big spenders Paris Saint-Germain in the last-16.

Real Madrid saw off last season's finalists Juventus in the quarters, beating the Italian giants 4-3 on aggregate.

It was suggested in the press conference that Zidane could return at some point (Image: REUTERS)

Zidane was under contract until 2020 in Madrid but has walked away from his role (Image: REUTERS)

Up next was German champions Bayern Munich in the semis, who Real Madrid beat 2-1 in the first leg before drawing 2-2 with in the second.

Madrid met Jurgen Klopp's swashbuckling Liverpool in the final in Kiev, and were more than a match for this campaign's surprise package.

Zidane during the shock press conference (Image: AFP)

Karim Benzema opened the scoring for Los Blancos, following a Loris Karius mistake, before Sadio Mane equalised for the Reds.

Gareth Bale restored Real's lead with a stunning bicycle kick, before the Welshman put the icing on the cake with a speculative long-range effort that Karius palmed into his own net.

It remains to be seen whether Zidane will opt to take a break from the game or pursue a fresh challenge immediately.

There are limited top-level vacancies available in European club football at present, but the fallout from this summer's World Cup in Russia might present a first international challenge to the Marseille-born coach.